Business conservatives have demonized every piece of progressive legislation as “creeping socialism” since the 1930s. Now that a democratic socialist has called their bluff, they’re at a loss. ….
Cities tend to favor building stadiums and convention centers over investing in education or human services. It’s an understandable but troublesome trend.
Many states are turning to tax incentives as one way to boost income in a still-rough economy. But they aren’t the only thing that can help.
Like many “flyover” cities, St. Louis’s decline is not mainly a story of deindustrialization, but of decisions in Washington that opened the door to predatory monopoly. ….
…. Experts often point to manufacturing decline, off-shoring, and racial strife to explain the relative economic weakness of St. Louis and other Rust Belt cities. But these ills hardly have afflicted St. Louis more than they have Chicago, New York, Boston, and Los Angeles—which all have mounted much stronger comebacks in recent decades. Yes, those other cities made the transition from manufacturing to services and technology. But a quarter century ago, St. Louis was already (and, to some extent, it still is) a hub of many of the post-industrial industries that have gone on to experience the fastest growth, from pharmaceuticals to finance to food processing. ….. The relative decline of St. Louis—along with that of other similarly endowed heartland cities—is therefore not simply, or even primarily, a story of deindustrialization. The larger explanation involves how presidents and lawmakers in both parties, influenced by a handful of economists and legal scholars, quietly altered federal competition policies antitrust laws, and enforcement measures over a period of thirty years. These changes, which enabled the same kind of predatory corporate behavior that took the Rams away from St. Louis, also robbed the metro area of a vibrant economy, and of hundreds of locally based companies. This economic uprooting, still all but unaddressed by today’s politicians or presidential candidates, accounts for much of the relative stagnation of other middle American communities, and for much of the anger roiling voters this election cycle. The rise and fall of St. Louis’s advertising industry stands as a cautionary tale for what ails so many of the once vigorous and innovative cities of “flyover” America. …..
From the summary:
The lackluster U.S. economy is delivering a humbling lesson about economic development: Top-line growth doesn’t ensure bottom-line prosperity. The potential of economic development is to do what markets alone cannot do: influence growth through action and investments.
Leaders in cities and metro areas have an opportunity to remake economic development—to adopt a broader vision of economic development that can deliver continuous growth, prosperity, and inclusion in cities and metro areas. While some creative and committed leaders and organizations are embracing this version of economic development, it needs to be further scaled up.
This requires understanding the purpose of economic development and getting both the markets and civics right:
The goal: To put a regional economy on a trajectory of higher growth (growth) that increases the productivity of firms and workers (prosperity) and raises standards of living for all (inclusion), thus achieving deep prosperity—growth that is robust, shared, and enduring.
The markets: Industry clusters form the foundation of regional economies. Different industries concentrate in certain metro areas to access specialized local assets—innovation and entrepreneurship, other firms in traded sectors, skilled labor, infrastructure, and governance—that enable them to be productive and generate income from the sale of their products and services. Economic development should prioritize building strong business ecosystems for core industries, improving the productivity of firms and people, and facilitating trade—the market foundations from which growth, prosperity, and inclusion emerge.
The civics: To get the markets right requires good civics: the work to organize and implement strategies and initiatives that engage stakeholders and partners to achieve long-term goals. A data-driven economic narrative and sense of urgency, networked leadership with high capacity organizations for implementation, and engagement of diverse stakeholders and perspectives to ensure strategies are inclusive are all essential….
From the summary:
Since the 2013 publication of Top Trends in State Economic Development, governors’ key advisors have continued to explore and implement policies and programs intended to accelerate economic growth and create jobs. Both the 2015 Institute for Governors’ Economic Policy Advisors hosted by the National Governors Association Center for Best Practices (NGA Center) and the NGA Center’s ongoing work with governors’ senior advisors provide opportunities to check in with the officials who support governors in formulating and executing their economic development plans and revisit selected trends in economic development.
From the press release:
Amidst a political season thick with pro-small business rhetoric, a new study on what states actually spend to help create private-sector jobs reveals a sharp bias against the “entrepreneurial economy.” In a detailed analysis of three diverse states—Florida, Missouri and New Mexico— the new research finds that at least two-thirds of their economic development spending primarily benefits large businesses. Less than a fifth clearly benefits small businesses, and about an eighth cannot be assigned either way. In total, the study looks at $344 million spent annually through more than 60 programs…..
Source: Robert W. Wassmer, Ryan S. Ong, Geoffrey Propheter, Economic Development Quarterly, Published online before print March 9, 2016
From the abstract:
An effort to secure a local government subsidy for a professional sports venue or event typically cites findings from a private consultant’s economic impact analysis on its purported benefits to the jurisdiction(s) offering the subsidy. Scholars have consistently expressed concerns regarding the ability of the public, and the officials that represent them, to detect the deficiencies that often plague such an analysis. We review the previous academic research to identify a common set of concerns regarding this form of analysis. These concerns are the basis for a list of 20 evaluative questions to consider in a critical assessment of an economic impact study. To illustrate the practicality of these questions, we ask them of previous studies regarding the economic impact of different professional sport venues or events in five different U.S. cities.
Massachusetts, like many states, uses tax credits to attract companies. But also like many states, it struggles to track the effectiveness of these programs. …. For the past half-decade, businesses and legislators in the Bay State have thwarted numerous attempts to track the effectiveness of tax incentives. State Auditor Suzanne Bump has been trying since she took office in 2011 to gain access to business tax returns at the Department of Revenue (DOR) for the purposes of auditing the tax credit programs. Bump is stymied by a state law that bans the auditor from accessing business tax information filed with the department. “Although we are told to audit the tax department, we cannot actually look at tax returns,” she says. “If you can’t look at the source documents, you can’t know how well DOR is executing its functions.” ….
The U.S. economic recovery entered its seventh year in 2015. Our businesses created 2.6 million jobs in 2015 and the unemployment rate fell to 5.0 percent, half its level in fall 2009, far faster than forecasters expected. Private domestic final purchases—the most stable and persistent components of economic output—rose 2.7 percent over the four quarters of the year, bolstered by solid personal consumption, strong residential investment, and record-setting investment in research and development. Health care price growth remained at low levels not seen in nearly five decades as the Nation’s uninsured rate fell below 10 percent for the first time ever. Overall, consumers were more confident about the economy than in any year since 2004. Nominal wage growth remained too low, but still grew faster in 2015 than at any time since the recovery began. While more work remains to be done on each of these fronts—especially in terms of wage growth—the U.S. economy exhibited substantial strength throughout the year. ….